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Right-to-Work: An Inflammatory Analogy

Left-libertarians are dismayed at the support most libertarians and classical liberals have been giving to right-to-work laws, which withdraw recognition from clauses in collective bargaining contracts that require all employees in a workplace to pay agency fees to the union that represents that workplace. Many libertarians have supported right-to-work laws on the grounds that they “balance the playing field” somewhat or undo some of the harm caused by the National Labor Relations Act (or “Wagner Act”), which requires employers to bargain collectively with a union that achieves majority support in an organization election. But left-libertarians aren’t buying that as a rationale for laws that withdraw recognition from a particular type of private contract.

[T]he distortions in human life caused by intrusive laws always raise the temptation to patch over the problems with additional legislation. That additional legislation is likely to lead to more problems … That’s why we’re always better off dumping bad laws than trying to “fix” them in a spiraling game of spackle-the-law books.

Right-to-work proponents argue that the laws they favor only help to level the playing field created by government action—by reining in special privileges granted to unions under existing labor law.

But those laws actually presuppose the restrictions inherent in that framework, while extending them further. One goal of the NLRA and later federal laws was to reduce conflict—-and in effect reduce workers’ choices—-by ensuring that just one union, moderate enough to win majority support (and therefore moderate enough to be cooperative with employers), would operate in a given workplace, while suppressing more radical unions and labor actions.

“Two wrongs never make a right. The economic answer is to repeal the bad intervention and not try to counterbalance it with another bad intervention. Such moves only provide the politicians with greater power over the entire economy.” In other words, the end doesn’t justify the means.

Is the “two wrongs don’t make a right” analogy persuasive here? First, let’s specify that we are looking at right-to-work laws for private-sector workers. RTW laws for public-sector workers could be viewed simply as the government’s tying its hands with respect to its own future collective bargaining negotiations, something that few would deny they have a moral right to do. Second, let’s all agree that the purpose of collective bargaining is, above all, to establish a monopoly of labor with respect to a particular employer. The union uses its bargaining power to negotiate higher wages and benefits than they could receive on a competitive labor market. That this is the primary purpose of unions, especially in the post-Wagner Act era, isn’t disputed by mainstream labor economists (see Mancur Olson’s Logic of Collective Action, among many others). Third, let’s agree as libertarians that the Wagner Act is unjust, that it wrongly forces employers to negotiate with a union and wrongly forces employees to be represented by a union even if they do not consent to such representation. Of course, non-libertarian liberals can and do disagree with this proposition.

Now, let’s consider an inflammatory analogy to the Wagner Act. Imagine that the government decides to give its official stamp of approval to Mafia protection contracts reached with shopkeepers (call it the “National Mob-Small Business Relations Act” (NMSBRA)). So long as the Mafia follows certain procedures in strongarming shop owners into agreeing to their demands, the courts will enforce contracts reached under duress. To libertarians, left and right, there is not much fundamentally morally different between the Wagner Act and the NMSBRA.

Now, suppose some of these mob protection contracts contain exclusive-supplier clauses. They state that the hapless storeowner not only must pay off the mob, but must use only mob-approved suppliers. In response, some states pass “right-to-supply” laws, which forbid the enforcement of mob protection contracts’ exclusive-supplier clauses, while leaving the basic structure of the NMSBRA intact.

Do right-to-supply laws take away freedom? After all, they interfere with “private contracts,” and it is possible, though unlikely, that some shopkeepers would want to sign exclusive-supplier contracts with the Mafia even in the absence of any threat of coercion.(*)

But surely, refusing to enforce a particular, exploitative provision of an extorted “contract” does not in any tangible sense infringe on freedom and, in fact, enhances it. By the logic of left-libertarian opponents of right-to-work, if the government ever adopted something like the NMSBRA, then “right-to-supply” laws ameliorating the oppression should be resisted as intrusions into supposed “freedom of contract.” This position reminds me of purist opponents of legal medical marijuana on the grounds that only fully legal marijuana is worth supporting.

Now, I don’t want to imply that mob protection contracts are in fact morally equivalent to union shop contracts. I am merely arguing that they are analogous. Sometimes an “extreme” analogy can help us better understand the moral principles behind our judgments. In this case, I see no intuitively appealing moral principle that could equally condemn right-to-work laws and the Wagner Act, as left-libertarians wish.

But there’s more. Union contracts are collusive contracts in restraint of trade, intended to drive up “prices” (wages) through monopoly power. If left-libertarians support enforcing such contracts, then it seems they are also committed to supporting the enforcement of collusive contracts by employers and producers. Given the small number of employers and producers, they are much more likely to be able to solve their collective-action problems than are workers and consumers, and therefore to exploit them through the use of collusive contracts, were the state to enforce them. If the state enforced minimum prices in markets where producers had agreed to them, the result would clearly be not just inefficient markets, but a massive transfer of wealth from consumers to capitalists.

Now, I can understand how egalitarian liberals might reasonably support different standards for collusive contracts among workers and among employers or producers. Collusion by workers on a sufficiently large scale might actually drive down the rate of profit and transfer wealth from investors to workers. But libertarians don’t endorse the use of the state machinery for the pure purpose of wealth transfer between classes. Individualist anarchists like Richman and Chartier seem committed to supporting the legal enforcement of collusive contracts, even if they result in massive harm to consumers and workers. That’s certainly a consistent position for a hardcore libertarian to take, but more moderate libertarians might well wonder whether all contracts ought to be legally enforceable (like indentured servitude contracts). Collusive contracts pose a major intuitive challenge to the position that the law should enforce all voluntarily agreed-upon contracts. And if we oppose collusive contracts in general, then we must also oppose collective bargaining in the workplace.

(*) Note: one way to design a right-to-work law so as to remove all suspicion of interference with freedom of contract is to apply it solely to collective bargaining contracts reached between an employer and an NLRB-certified union. National Labor Relations Board (NLRB) certification is an indicator that the union has chosen to resort to extortion via the state to achieve its aims. Limiting the union’s power to enforce that extortion increases freedom categorically (on the libertarian understanding of freedom).

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35 Responses

Jason, I don’t think this argument works. What’s more, I’ll say (sticking my neck out) that I don’t think there are a left-libertarian and libertarian positions here; I think there is just a libertarian position here, based (as Chartier, Lucille, Richman, and others have argued) on respect for contract.

First, I think the analogy between the mob and the labor case is a bad one. The mob is doing something it is not entitled to do, but workers are (at least on libertarian grounds) entitled to contract with each other to withhold their labor absent terms they agree on. Of course, they are not entitled to require that others abide by their terms. But if employers find the advantages of employing union labor (on terms that might include a closed shop) greater than the advantages of hiring outside the union, I see no basis for thinking there is a wrong that coercive force ought to rectify. The Wagner act introduces the wrongfulness in the one case, where it is there already with the mob case. That means the right thing to do in the labor case is to address the source of wrong, which is the Wagner act, not the rightful relation between people (i.e. labor unionism) it interferes with. That reasoning just doesn’t apply in the mob case.

As to collusive contracts between producers, I don’t know what Lucille, Chartier, and Richman would say, but if they were principled, they would say the state has no business blocking those either. If entrance to the market is genuinely open, that is exactly the right protection against collusion beyond such a point as is genuinely beneficial for consumers. (Because economies can be achieved that way.)

In both cases, the right thing to do is to address the wrongful interference with voluntary and rightful conduct, in this case Wagner Act interference with labor contracts. The case seems most strongly analogous to me to the immigration case, where for many years some libertarians argued that immigration restrictions were necessary because of the (unjust) welfare state. But two wrongs do not make a right in that case (thankfully, it seems to me that most libertarians now recognize that), and they don’t make a right here. I think you missed the call on this one.

I’ll defend the analogy, Mark. It’s true that there is a formal difference in how the extortion is organized in the two examples, but I don’t think that difference has any moral significance.

Just as workers may legitimately negotiate the terms of their employment with employers, so men with guns may legitimately negotiate the terms of providing security to shopkeepers. Where the wrongness comes in is when workers threaten employers with prison if they fail to negotiate (the Wagner Act), or when the men with guns threaten the shopkeepers with property destruction if they fail to negotiate (the mob protection contracts).

Now, I grant that it’s theoretically possible that some employers would be willing to agree to fire every nonunion worker even in the total absence of extortion, but it’s not very likely. For the most part, RTW laws are simply limiting one advantage that unions are able to extort out of employers almost solely because of the Wagner Act. And as my note makes clear, RTW laws would clearly pass libertarian muster if they applied solely to NLRB-certified unions. (It’s not true that RTW laws exempt a state from the Wagner Act; the NLRB still certifies union elections in RTW states.)

WRT collusive contracts, I just don’t buy that entry is so frictionless in every industry that collusive contracts wouldn’t harm consumers. If I’m a potential entrant, would I rather undersell my competitors for a very short period of time, generating some immediate profits but then sparking off a dog-eat-dog price war, or would I rather join a legally enforced cartel virtually ensuring high profits for the foreseeable future? I might well choose the latter, esp. if entry is costly enough that not every Tom, Dick, and Harry can try to undercut the cartel (think free-market electricity, natural gas, or highway markets, in which many parallel, physical connections to the consumer are infeasible, and even in the absence of cartel oligopoly is likely to prevail).

Jason, the second issue is an empirical one. Setting aside utilities (which, I grant, have complications), I don’t know of any empirical evidence for the effect of which you’re writing. Do you? On the other hand, we have lots of evidence as to how anti-monopolistic and anti-trust legislation does nothing for consumers and lots to close down markets.

But I’m really surprised on the first point. You see no moral difference between people saying, “We won’t work for you unless you pay more” and saying, “Pay us or we burn your store down?” Doesn’t the fact that the former have every right not to work for somebody, for any old reason they choose, while the latter have no right whatsoever to torch somebody else’s property, make any difference to the moral landscapes here? That is a really surprising thing to hold. It seems to assume that there is perfect moral neutrality between the offers (“I’ll work for you if you pay more”) and threats (“I won’t burn your business down if you hire us.”) The point isn’t the formality of the offer/threat; those can be doctored pretty easily. But the background assumptions as to who is entitled to do what could not be more sharply in contrast. I must be missing something; I can’t imagine that you really think there is no moral difference there.

Finally, as to “passing libertarian muster”: it still seems to me that you are missing the basic argument that the LL’s are making here. The point isn’t that there is some freedom restored with RRL; that’s true. The problem is that that’s not the basic issue. The basic issue is the law limiting liberty in the first place — the Wagner Act. And the libertarian solution to bad laws is not to pass laws to mitigate some of their effects; it is to get those laws off the books. And whether or not employers would choose to contract in ways that the NRLB in fact endorses or not, the fact is that nobody has any business of denying their right to do so. RRL do just that, and that makes them morally problematic. It’s a poor conception of freedom to fix one unjust constraint by imposing another. The libertarian solution is: the labor legislation needs to go. Period.

I agree the second point I made is an empirical issue — but so far as I know, English and US common law never permitted price-fixing contracts to be enforced, so we really don’t have any real-world examples for testing the relevant hypothesis. Still, that alone can be an indication that people have always viewed price-fixing cartel contracts as dangerous.

What the Wagner Act allows unions to say is: negotiate with us (and us alone), or you can’t engage in business. Once a workplace is unionized, you have no choice but to negotiate with the union in accordance with regulations promulgated by the NLRB; to avoid negotiating with the union, you would have to shut down the workplace. Again, I don’t want to say that that’s morally equivalent to threatening to destroy someone’s store, but it’s analogous in the key sense that someone is threatening force in order to extort favorable treatment of some kind.

I agree that repealing the Wagner Act is ideal, but states don’t have that authority, so it seems to me that a properly designed RTW law is plainly a gain for freedom (it need not impose any new constraints on freedom, although I grant that RTW laws as they exist do appear to impose such constraints, even if I doubt their practical importance). In the same way, repealing the Controlled Substances Act would be ideal, but since the feds aren’t going to do that, passing a medical marijuana law is still something worth supporting at the state level.

1. There is an important difference between statewide measures like med marijuana laws and RWL, in that they don’t prohibit voluntary contractual arrangements. RWL do, and that is a reason for libertarians not to embrace them, even if they might make tactical sense (a point I made w/Jeremy). If we’re not doing political tactics but assessing philosophical justification (as I took you to be doing here), then that point doesn’t I think carry through.

2. Our big disagreement is over the significant background conditions for threats. Is it permissible for me to say, “Hand over that knife and I won’t shoot you?” Answer: it makes all the difference in the world what the background conditions are. If you are just showing me a nice knife, then I may not do that. If you are holding the knife to the neck of an innocent victim, then what I do is perfectly permissible.

We don’t disagree on the impermissibility of the Wagner Act; our only disagreement is over the moral analogy between collective bargaining in a non-Wagner Act world and mob threats. (And, to narrow our disagreement even further, we agree that the interesting question is only for private firms; the notion of collective bargaining for public employees is pernicious nonsense.) Both, you argue, are attempts at establishing monopoly power. I agree they both do, but deny they are moral analogs, because in the one case they are entitled to control over their own labor, and whether or not to control it. They violate nobody’s rights by withholding it, so if they agree with each other to do so, and gain the consent of an employer to deal only with them on those grounds, nobody is doing anything they do not have the moral right to do. Not so with the mob case, where the moral line has been overstepped at the outset. Background makes all the difference.

3. The empirical question is a good one. I’d think that there would be evidence from imperfect compliance with trust law, or any of the 9 jillion cases in which trust law has been imposed in order to solve such alleged problems. So far as I know, the evidence that consumers have been harmed is never in much supply; instead, there is the (groundless) supposition that consumers must be being harmed, so the interference is warranted. I’d be very surprised if in this case the absence of evidence did not indicate evidence of absence.

The fact is that we live with a history in which (unjust) limited liability and other forms of corporate support antedate bad trust law, labor law, and other forms of misguided legislation. So it’s difficult to get evidence for good counterfactuals. I myself think the moral case is compelling in any event, certainly without strong empirical evidence that there is an actual problem, rather than one we are quite sure a priori would exist.

I think we’re getting somewhere here. I agree that the background conditions matter. I’m not confident that RWL would be justified in the absence of the Wagner Act. The aside on collusive contracts shows that I lean toward saying “yes,” but the answer depends on empirical facts, because I’m not a “contract absolutist” for lack of a better term. But I certainly don’t think that voluntary collective bargaining and mob threats are moral analogues; you’ve misunderstood me there. I think the Wagner Act and mob threats are moral analogues, and that voluntary collective bargaining is undesirable (but not unjust) cartel behavior.

But in the presence of the Wagner Act, RWL don’t interfere with voluntary contracts at all. They interfere with extorted contracts. Now, I concede, it’s possible that they also interfere with voluntary arrangements in a few instances, but it’s probably fruitful to focus on separate questions separately. One question is: When RWL prohibit arrangements reached through collective bargaining contracts that exist only because of the force applied by the Wagner Act, are they just or unjust? Then a separate question might be: Assuming RWL are just when they interfere with extorted contracts and unjust when they interfere with voluntary ones, are they “all things considered” justified? Our answer to that question might depend on whether, for the sake of policymaking, we should be consequentialists about rights or instead take the view that a single rights violation is enough to make a policy change unjust, even if it involves the withdrawal of a greater number of rights violations.

And I think we agree (don’t we?) that the Wagner Act problematizes something that isn’t by itself morally problematic (though you may have reservations here): a union negotiating for a closed shop, without the threat of the state behind it. Though I think it would be unusual for that to represent a good bargain for an employer, it is certainly possible that it might, and in any event I think the judgment as to whether or not it is a good bargain should be reserved to the bargainers themselves, viz. (given the union offer) the employer.

And as I look at it I think it may have misunderstood the analogy you intend. It seems to me that the analog of the Wagner Act, in your hypo, is the NMSBRA, not the mob threats. The mob threat analog, it seems to me, is the voluntary collective bargaining agreement by the unionized workers. Isn’t that right? Then your narrow point would be that a right-to-supply law, in undermining the duress agreement “negotiated” with the mob, would be liberty-enhancing.

I think that is right, but I do think that the difference between the moral status of the unionized workers (entitled, that is, to decide individually or collectively what terms of employment they will accept) and the mob (not entitled at all to threaten damage to the business) undermines the force of the analogy. Why? One way to think about the difference is to think about what steps would be required to restore the situation to rightness. In the labor situation, all that would be required (at least so far as we are concerned with here) would be repeal of the Wagner Act. In the mob case, however, it would require repeal of the NMSBRA and interdiction of the mob threats. I think the implications of the different moral status ex ante affect the downstream moral acceptability of solutions for dealing with the problem.

At the end of the day, I don’t have any heart attack either over RTW laws. But neither do I think they deserve endorsement by libertarians. Economically, they may be a boon (or they may not — the evidence seems mixed). But morally they do not grasp the problem, so they do not represent a solution, and it seems to me that if we don’t keep our eyes on the prize, nobody will.

Actually, I can think of scenarios in which it would be advantageous for employers to agree to closed-shop contracts w/ unions: Ones in which the unions could, in return, guarantee a steady supply of high-quality, reliable workers. Unions could offer low-cost training for their members. In fact, this is what good unions already do. The problem is that it works best for high-skilled professions; I had a family friend who was a lifelong Printer’s Union man in Oakland, CA. He once told me they made a contract w/ employers that they could upgrade any technology they wanted in their firms, so long as their members were the ones trained to operate it.

The biggest unions today do not do this. Their members are primarily employed in low-skilled professions (e.g., car manufacturing), and they are highly resistant to quality control of their members (e.g., letting them take long lunch breaks where they booze it up at barbecues in the park). They have resisted automation & mechanization of their production lines.

Furthermore, even in skilled professions where unions do attempt to police their members, it may still not be enough to ensure the high-quality workforce needed by employers. My former Martial Arts instructor was a welder by trade, and a union shop steward at his workplace. He told me about how his fellow workers would game the system by calling in sick on Fridays, then making up the time on weekends, when they’d get double their hourly pay. He’d call them on it, but they’d plead innocent. The company soon shut down entirely after he told me that story. He was lucky enough to be able to retire, but many of his former co-workers were not.

Almost there, I think! Here’s the analogy I was thinking of… The Wagner Act is like the mob threats — it says, “if you don’t negotiate with them, we shut down your business,” just as the mob threats say, “if you don’t pay us, we shut down your business.” Then, in the context of the Wagner Act, the agency shop is like an exclusive-supply agreement in the context of mob threats. The agency shop is agreed to under duress (the federal government’s threats to shut down the business if they don’t negotiate under the rules the NLRB sets down), just as the exclusive supply agreement with the mob is agreed to under duress.

If all agency shops are agreed to under duress, then banning the agency shop is unequivocally liberty-enhancing because it removes a particular form of abuse. Now, there is an empirical question about how often the agency shop would exist in the absence of the Wagner Act, and whether if it did, such contracts still ought to be enforced — but that’s a separate question. The narrow point I wanted to make is that if the agency shop is something that’s agreed to under the duress generated by the Wagner Act (which is indisputedly very often the case), banning doesn’t infringe on and indeed enhances liberty. I did not intend to argue that collective bargaining is inherently extortive or a form of duress, but under the Wagner Act it (almost always) is.

Let me see if I accurately grasp where we are. We agree on most things, including the analogy between the Wagner Act and mob threats. (In fact, I think it is a form of mob threat, with comparable lack of moral legitimacy.) Then, setting aside the work of the analogy for the moment, I think if we disagree it is over the nature of the contracting position an employer (suppose for the moment it is an individual, Ed) is in under the Wagner Act, and what RWL does vis-a-vis his liberty.

I think you want to claim (and I think you think the analogy shows) that RWL is either entirely are so nearly entirely liberty-enhancing for Ed that libertarians ought to endorse it. Do I have that right?

If so, that is the point I want to push back on. It obviously is liberty-enhancing in one way (it relieves the coercive threat imposing the closed shop), but it violates liberty in an obvious way, in precluding Ed from voluntarily entering into a closed-shop agreement. I think we agree that is so, but perhaps disagree as to the significance of that fact. I think it is significant, first because Ed might wish to enter into such an agreement (Tim mentioned one such case, though we always have to wary of the background effects of a variety of ways in which markets are not free). But second, and more importantly for me, I think the idea that “we” (whoever is legislating) has the authority to make that judgment for Ed is every bit as morally problematic (whether or not Ed would wish to make such an agreement) as is the mob threat and the Wagner Act in the first place. The problem is the assertion of the authority to constrain the authority of others to contract.

I am indeed on a bit of a tear about this because I think it is very easy for libertarians not to care about rights to contract until it is too late. Then we find ourselves having to argue for the specific reasons why somebody should be allowed to contract in a specific way (in effect, entering into precisely the problematic authority position we should be worrying about in the first place), rather affirming the authority individuals have over their own lives and choices,e even over what choice are or seem like bad ones. That, it seems to me, is worth keeping clear about.

I think you have put your finger on the locus of our disagreement. If RWL were limited solely to prohibiting the agency shop in workplaces organized under the NLRB, the analogy to the “right-to-supply” law would be perfect. I don’t see how such a law would infringe on any freedom, because it would simply be prohibiting an extorted benefit for labor unions. It would not apply to any contract reached under free conditions.

Now, I grant that real-world RWL, to my knowledge, have not been structured this way, and that is unfortunate. I can agree that libertarians should not cheerlead for RWL as they have been written. However, that’s not the same as saying that RWL should be opposed. The empirical question about whether RWL-as-written violate more rights than they secure remains open. My judgment is that they secure more rights than they violate. Thus, were I a legislator, I would vote for them. But again, I can still agree with you that RWL-as-written should not be promoted as the solution to government intervention in the labor market.

Second, let’s all agree that the purpose of collective bargaining is, above all, to establish a monopoly of labor with respect to a particular employer. The union uses its bargaining power to negotiate higher wages and benefits than they could receive on a competitive labor market.

Sure, and I could just as easily say that the purpose of incorporation is, above all, to establish a monopoly of capital with respect to a particular employee. The capital union of investors, creditors, shareholders, management etc uses its bargaining power to negotiate lower wages and benefits than they could receive in a competitive capital market (i.e. one free of government privileges of incorporation).

After all, anti-labor folks argue that a union shouldn’t pretend to represent all workers in a negotiation, and that outcomes would be better for all if workers each negotiated individually with the employer. But let’s extend that reasoning: why should workers be forced to deal with the management that the shareholders/owners picked? Why can’t they negotiate separately with each owner in order to effect the best deal they can?

Why, in other words, does the act of creating a capital union (which has always required legal monopoly to realize, through incorporation) imply a free market negotiation, but creating a labor union somehow implies that the negotiation and bargaining is somehow monopolistic or criminal, as you do?

I’d also point out that radical laborists have always opposed Wagner, Taft-Hartley, and all that noise. If the RTW folks were serious about a free market, they’d be forming alliances to knock those laws down.

Jeremy, I take it one political point in response to your last claim is that the RWL project can be taken on state-by-state, whereas repealing the problematic legislation has to be a national project, and likely is more difficult. I think that justification cuts some ice as to what it makes sense to do politically, but it doesn’t address the basic point in philosophical theory, which is what I take it Jason is after.

On the other hand, as perhaps you are suggesting, there are a whole lot of folks who either don’t understand the difference between being pro-business and pro-market, or are squarely in the first camp in any event.

Jeremy, I take it one political point in response to your last claim is that the RWL project can be taken on state-by-state, whereas repealing the problematic legislation has to be a national project, and likely is more difficult.

That’s one possibility. Another is that they prefer the rationality, order, and competitive entry barriers that both capital and labor unions represent in the broad strokes to the relative chaos of a genuinely free market. Within that structure, they just want to tinker along the edges to gain a marginal advantage.

So, how do unions protect workers when they’re employed by the government? Most unionized workers in America today are government employees. What exploitation of those poor suffering government employees was there before they were allowed to unionize? How were they at the mercy of their massively-scaled employers?

Personally, I’d be happy w/ RTW laws that only applied to government employees, or firms where the government was an investor (like GM). But those aren’t on offer anywhere, so I’ll take what I can get.

Tim Starr: I wrote about government unions from a libertarian perspective here. One of the problems with the current labor narrative is that it’s all about wages and benefits, when that’s really only two axes in a multi-faceted employment experience. I think the dynamics are different only in how they’re named, not their essence.

Jason Sorens:

Incorporation doesn’t create a cartel or monopoly — and unions are corporations in any case.

Sure it does: in the same qualified sense that you described labor unions having a monopoly relative to a given employer, capital unions have a monopoly relative to a given employment opportunity. What’s good for the goose, right?

Unions being corporations (to the limited extent this is actually true and relevant) just makes my point further: both sides, not merely one, engage in collective bargaining, but the rules are different depending on which kind of corporation you are.

“[C]apital unions have a monopoly relative to a given employment opportunity.”

In what sense? Most labor markets are highly competitive, and when they are not, that fact doesn’t appear to have anything to do with incorporation. Your local Rotary Club is a corporation; so is the local credit union; so is the independent consultant who works at home. In what sense are they all “monopolies”?

I get that you think that I regard corporations as a special ill here, and I do, but not in the sense that is most convenient to the argument you make in your post.

My point is that you are engaging in special pleading on behalf of “capital unions” who engage in collective bargaining in a VERY similar manner as labor unions, but under different rules that skew the balance of power.

The state creates the possibility of a singular corporate identity that investors can stand behind so that third parties *must* bargain with that abstract stand-in non-person. They do this because, labor being just another cost among many, it provides the best return for their capital investment to deal as a unit.

Now, they don’t have to do this. They can start sole proprietorships. They can form partnerships. They can manage their business directly and not hire a layer of management. But most of the time, they structure things the way the MBAs tell them to. And the state enforces this as legally binding, so they can’t just take their assets and go home or block day-to-day decisions even.

Why should a potential worker be compelled to recognize that stand-in identity simply because it is certified by the state? Why shouldn’t an individual worker be able to negotiate separately with each of the several owners, to see if he or she can get a better deal than negotiating with the entire unit?

It’s not like it’s unheard of for factions–sometimes majorities–of shareholders to be opposed to management, with the same managers staying in power and executing their own agenda. In fact, their skimming sounds an awful lot like what anti-labor folks accuse union bosses of.

It just seems like if RTW is all about ensuring complete freedom to bargain individually or collectively on one side, you should also extend that to the other side.

“[C]apital unions have a monopoly relative to a given employment opportunity.”

In what sense?

In the same sense that labor unions have a monopoly that you spoke of: a monopoly over negotiations with a particular employer. In other words, the monopoly you speak of is a very limited one, but it certainly matters, just as the corporate monopoly on dealing with capital investors is a very limited one, but it *matters*.

Jeremy, I can see there are some similarities (as there would be with any collective activity humans engage in), but I’m not persuaded that the analogy is strong.

Here is one difference: in the labor case, suppose you work for me, and I say, “Jeremy, you are such a fabulous analogy-builder, I’d happily pay you more. But you are a member of the union, so I cannot. Why don’t you quit and I’ll just work a deal with you to build your analogies at better pay?” That option is legally off the table. But suppose instead I am laboring at a firm in which you are part-owner (a shareholder, let’s say, in a public corporation). Now, there is no bar to me saying, “Jeremy, you have your money invested in a crappy analogy-fabrication operation. If you withdraw your investment and give it to me to start a competitor, I can earn you a better return.” Unlike what I think you suggest in your comments, there is nothing barring you from doing so. (Indeed, there is nothing barring all the shareholders from withdrawing their investments, at least to the point where the corporation founders. Nobody has to deal with that corporation who chooses not to, but in the labor case, the employer has no choice but to employ through the union. That seems to me a pretty significant disanalogy on the crucial point.

I don’t find your analogy analagous. For one thing many laws including some labor laws favor businesses over unions and workers. You want more state involvement placing thumb on scales of business side which will predictably just escate the stakes, invite more laws to balance out yet again. And for that you forfeit the libertarian high ground. Also for all your talk of fairness you aren’t concerned about free riders who benefit from union while not supporting it.

Speaking of empirical issues, let’s talk about who this law will actually affect. How many private employers are there out there who want to sign closed-shop agreements, or would be willing to do so in a free labor market? Not many. Which unions/firms are most affected by this? Government employee unions, & the UAW, both of which are highly coercive; government employee unions by definition, and the UAW due to its high degree of involvement w/ the Democratic Party; to the point where it got Obama to bail out GM to the benefit of the UAW, screwing GM’s bondholders in the process.

I made an assumption about collective bargaining that pretty much all labor economists endorse, not an assumption about what motivated the Wagner Act. In other words, both the New Left historiography of the Wagner Act and my claims about the purposes of collective bargaining could be true at the same time.

Jeremy: You seem to be confusing Marxism with Libertarianism, unless you’re insisting upon the old definition of “libertarian” that left-anarchists use. You’re completely wrong about teachers being underpaid, they’re overpaid compared to other workers w/ their qualifications, and that’s certainly not true for other types of unionized government employees. E.g., The starting compensation package for a cop in San Francisco is $160K/year, for a job not requiring a college degree.

As for the claims about “capital unions” and corporations allegedly having monopolies on employment, that ignores competition between firms. For an analogous situation to the union closed-shop, workers would both have to belong to a union in order to get a job, and they would only be allowed to work for a single corporation. THAT is the arrangement that firms w/ closed-shop contracts have w/ unions: They can only hire members of a SINGLE union. They’re not allowed to hire anyone who belongs to any other union.

So, given the fact that there are multiple firms in virtually any industry, workers can play different firms off against each other to get the best deal for themselves. In a truly free market, that would include closed-shops vs. open shops. Without the Wagner Act, we’d have that.

You’re completely wrong about teachers being underpaid, they’re overpaid compared to other workers w/ their qualifications, and that’s certainly not true for other types of unionized government employees. E.g., The starting compensation package for a cop in San Francisco is $160K/year, for a job not requiring a college degree.

They are not overcompensated; private sector workers are undercompensated. Public sector unions, in my opinion, represent a high water mark of returns to labor overall. To say one is more justly compensated than the other implies you have an opinion on what just compensation should be, unless your argument is that we live in a perfectly and absolutely free market. In which case, I’d accuse you of confusing corporatism with libertarianism.

As for the claims about “capital unions” and corporations allegedly having monopolies on employment, that ignores competition between firms.

Yes. But unions compete among themselves for workplaces, too. Unions are always scared another organization will sweep in and displace them–SEIU engaged in a lot of this lately. In fact, one of the reasons Wagner is so distorting is because it mandates that only one union represent the workers. If there’s a monopoly, the government bears responsibility for limiting worker’s choice of unions.

So, given the fact that there are multiple firms in virtually any industry, workers can play different firms off against each other to get the best deal for themselves.

Workers could do this individually or collectively. But within a corporate entity, the investors cannot. This is the asymmetry.

The private sector labor market may not be perfectly free, but it is vastly freer than the public sector market, since governments not only have monopolies on many of the services the provide, but people are also forced to pay for them through taxes regardless of whether they actually consume those services or not. Then there’s all the tax-exemptions that government agencies are privy to, which their private competitors are not, when there are any private competitors.

I love it: a “libertarian” who thinks that government employees epitomize just compensation for labor in an approximation of the “free” market.🙂

[…] laws, which formally restrain employers’ hiring decisions, as a positive for freedom, because our research indicates and facts show that these laws violate few people’s freedom, while increasing freedom for a greater number. […]

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